Bonds et al v. Compass Group et al
Filing
83
OPINION AND ORDER Granting 57 Motion to Dismiss Counts I and II. Signed by District Judge F. Kay Behm. (KMac)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
DENISE BONDS, et al.,
Case No. 22-11491
Plaintiffs,
F. Kay Behm
United States District Judge
v.
COMPASS GROUP, et al.,
Defendants.
___________________________ /
OPINION AND ORDER GRANTING MOTION
TO DISMISS COUNTS I AND II (ECF No. 57)
I.
PROCEDURAL HISTORY
Plaintiffs have brought an employment action against their former
employer(s), Defendants Compass Group and Crothall (collectively
“Crothall/Compass”) as well as the DMC Defendants (Tenet Healthcare
Corporation, VHS of Michigan, Inc., d/b/a Detroit Medical Center, and VHS
Harper-Hutzel Hospital, Inc.) who contracted with Crothall/Compass to provide
certain environmental and facility management services at the DMC hospitals.
Plaintiffs filed their Third Amended Complaint (TAC) on June 6, 2023 (ECF No. 50)
after the court granted in part Defendants’ motions to strike portions of the
Second Amended Complaint. (ECF No. 51). The DMC Defendants then filed a
motion to dismiss Counts I and II of Plaintiff’s TAC. (ECF No. 57). The
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Crothall/Compass Defendants also filed a concurrence in the motion to dismiss
these two counts of the complaint. (ECF No. 61). In Counts I and II of the TAC,
Plaintiffs allege the DMC Defendants violated the Michigan Medicaid False Claims
Act, Mich. Comp. Laws § 400.610c, (“Michigan FCA”), and the False Claims Act, 31
U.S.C. § 3730(h), (“FCA”). This matter is fully briefed. (ECF Nos. 59, 60). The
court has determined, pursuant to Local Rule 7.1(f)(2) that this matter can be
decided without a hearing.
For the reasons set forth below, the court GRANTS the motion to dismiss
Counts I and II.
II.
THIRD AMENDED COMPLAINT
Defendant Tenet is a private corporation that is the parent company of
hospitals throughout the country, including in the Metro-Detroit area. Defendant
VHS of Michigan Inc., which does business as the DMC, operates hospitals in the
Metro-Detroit area, including Defendant Harper-Hutzel. (ECF No. 50, ¶¶ 8-10, 15;
ECF No. 56). Plaintiffs allege that they previously worked for Sodexo, which Tenet
contracted to provide environmental services to DMC hospitals. Id. at ¶¶ 16-19.
In September 2019, Tenet contracted with Crothall/Compass to take over the
environmental service operations at the DMC, including at Harper-Hutzel. Id. at
¶¶ 11, 22-23. At that same time, Plaintiffs became full-time employees of
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Crothall/Compass and were placed at Harper-Hutzel. Id. at ¶ 25. Plaintiffs allege
that they were employees of Crothall/Compass and Crothall/Compass was their
employer. Id. at ¶¶ 172, 212, and 223. While employed by Crothall/Compass,
Plaintiffs were “housekeepers” and were also union stewards. Id. at ¶ 26.
Plaintiffs’ employment was terminated by Crothall/Compass in May 2022. Id.
¶ 25.
In the TAC, Plaintiffs compare the level and quality of the environmental
services that Sodexo provided to the DMC hospital to those that were provided by
Crothall/Compass, alleging that there was a decline in the quality of services
provided to the DMC Hospitals when Crothall-Compass provided them. (ECF No.
50, ¶¶ 16-25, 40-44). Plaintiffs allege that Sodexo “never ran out of supplies and
had enough cleaning supplies . . . and essentials to properly sanitize patient rooms
and operating rooms, per established Sodexo protocols” (id. at ¶ 20), and Sodexo
used “hospital grade cleaning products and separate rags and mops in order to
avoid cross contamination” (id. at ¶ 21). Plaintiffs allege that since
Crothall/Compass has been providing the environmental services for the DMC
hospitals, the “cleaning protocols changed from best practices with Sodexo to
deplorable with Crothall/Compass.” Id. at ¶ 39. Plaintiffs allege that under
Sodexo, they were provided approximately 50 rags to clean 28 rooms versus 5
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rags to clean 28 rooms under Crothall/Compass (id. at ¶¶ 40-43), “[m]ops went
from an unlimited supply to not enough to do the job properly” and “[c]leaning
solutions that were ‘hospital grade’ were always out” (id. at ¶ 44). Plaintiffs also
allege that Defendants failed to follow Covid-19 protocols and provide Plaintiffs
with proper PPE. (ECF No. 50, ¶¶ 48-62).
Based on the alleged decline in the quality of environmental and sanitation
services and the decrease in the quantity of cleaning supplies under
Crothall/Compass, Plaintiffs allege they made numerous complaints to
Defendants’ leadership relating to sanitation at Harper-Hutzel. Bonds’ email to
Defendants’ leadership and Plaintiffs’ union stewardship states that 12 to 15
employees in the EVS department have contracted Covid-19, cites the use of rags
to mop floors and a consistent lack of cleaning supplies, and attaches videos of
“managers hoarding the supplies.” Id. at ¶ 59. Plaintiffs’ other alleged internal
complaints and reports to the DMC Defendants also related to the environmental
services provided by Crothall/Compass and raised concerns of inadequate
cleaning supplies, the use of “Brawny” paper towels instead of rags or mops to
clean and sanitize, and the general lack of sanitary operating rooms and patient
rooms. (ECF No. 50, at ¶¶ 87-95). Plaintiffs also submitted OSHA complaints
about the lack of supplies. Id. at ¶¶ 99-100. Plaintiffs’ OSHA complaint states, in
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part, that “Crothall has a serious problem with keeping supplies on a regular [sic],
we are in a PANDEMIC. . . and I am not able to clean and keep patients, staff and
employees safe. Harper Hutzel is the facility with this problem.” Id. at ¶ 99.
Another OSHA complaint submitted by Plaintiffs states: “Harper Hospital is not
safe and is a hazard that is operated by Crothall Healthcare . . .. Crothall
Healthcare has a serious problem with keeping supplies, rags, mops, trash bags,
chemicals, etc. . . . EVS department is to keep the facility clean, safe and [sic] from
hazardous at Harper Hospital. In order to keep a clean and safe facility we need
to 8 have supplies on a regular basis. We are in a PANDEMIC. At one point the
virus (Covid-19) hit the EVS department hard. I’m no expert, but do [sic] to no
supplies is a hazardous, unsafe, and unclean facility. That’s a violation . . . and it’s
time for someone to pay a visit and intervene on behalf of safety at Harper
Hospital.” Id. Plaintiff Rhodes complained in an email to “Crothall/Compass
leadership” regarding “bad sanitary environment,” “lack of medical/cleaning
supplies,” lack of a fit test, “not enough sterilization supplies,” and “supplies are
always out of stock or rationed.” Id. at ¶ 131.
Plaintiffs allege that because of these complaints to OSHA,
Crothall/Compass were fined and that the “fine upset Defendants and the
retaliation and mission to terminate Plaintiffs became Defendants’ main focus.”
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Id. at ¶¶ 101-02. After Crothall/Compass terminated Plaintiffs’ employment, they
brought this action against Crothall/Compass and the DMC Defendants. In the
TAC, Plaintiffs allege eight employment-based claims, including violations of the
retaliation provisions of the Michigan FCA and the federal FCA, the Bullard
Plawecki Employee Right to Know Act, and the Elliott Larson Civil Rights Act;
intentional infliction of emotional distress; conspiracy; wrongful discharge; and a
whistleblower claim. Defendants’ motion to dismiss is only related to Counts I
and II of the TAC, in which Plaintiffs allege Defendants violated the Michigan FCA
and the federal FCA.
III.
ANALYSIS
A.
Standard of Review
In deciding a motion to dismiss under Rule 12(b)(6), the court “must
construe the complaint in the light most favorable to the [nonmoving party] ...
[and] accept all well-pled factual allegations as true.” League of United Latin Am.
Citizens v. Bredesen, 500 F.3d 523, 527 (6th Cir. 2007); see also Yuhasz v. Brush
Wellman, Inc., 341 F.3d 559, 562 (6th Cir. 2003). The complaint must provide “‘a
short and plain statement of the claim showing that the pleader is entitled to
relief,’ in order to ‘give the defendant fair notice of what the ... claim is and the
grounds upon which it rests.’” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 545
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(2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). Moreover, the
complaint must “contain[ ] sufficient factual matter, accepted as true, to state a
claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 677
(2009).
A complaint is subject to dismissal for failure to state a claim if the
allegations, taken as true, show the plaintiff is not entitled to relief, such as “when
an affirmative defense ... appears on its face.” Jones v. Bock, 549 U.S. 199, 215
(2007) (quotation marks omitted). A claim has “facial plausibility” when the
nonmoving party pleads facts that “allow[ ] the court to draw the reasonable
inference that the [moving party] is liable for the misconduct alleged.” Id. at 678.
However, a claim does not have “facial plausibility” when the “well-pleaded facts
do not permit the court to infer more than the mere possibility of misconduct.”
Id. at 679. The factual allegations “must do more than create speculation or
suspicion of a legally cognizable cause of action; they must show entitlement to
relief.” League of United Latin Am. Citizens, 500 F.3d at 527. Showing
entitlement to relief “requires more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not do.” Ass'n of Cleveland Fire
Fighters v. City of Cleveland, 502 F.3d 545, 548 (6th Cir. 2007) (quoting Twombly,
550 U.S. at 555).
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B.
Count I - Michigan FCA
The DMC Defendants argue that Plaintiffs’ Michigan FCA claim against them
must fail because the protections of the Michigan FCA only apply to “employees”
and the TAC makes it clear that Crothall/Compass employed Plaintiffs. Mich.
Comp. Laws § 400.610c prohibits an employer from retaliating against an
employee “because the employee engaged in lawful acts, including initiating,
assisting in, or participating in the furtherance of an action under this act or
because the employee cooperates with or assists in an investigation under this
act.” Unlike the federal FCA, the Michigan FCA does not extend protection to
“contractors.” Compare Mich. Comp. Laws § 400.610c with 31 U.S.C. § 3730(h).
Thus, the DMC Defendants argue that because Plaintiffs were employed by
Crothall/Compass and not the DMC Defendants, they cannot bring a Michigan
FCA claim against them.
In response, Plaintiffs appear to concede that only employees may sue
under the Michigan FCA. Thus, Plaintiffs argue that the DMC Defendants and
Crothall/Compass were “joint employers” of Plaintiffs and therefore, they can
bring the Michigan FCA claim against the DMC Defendants. However, nothing in
the TAC suggests that the DMC Defendants were joint employers with
Crothall/Compass. More specifically, Plaintiffs point to no allegations in the TAC
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from which the court could draw a reasonable inference that the DMC
Defendants were a joint employer with Crothall/Compass. In fact, such an
inference is contrary to the multitude of express allegations in the TAC that
Plaintiffs were employed by Crothall/Compass. Without any supporting
allegations, the court cannot infer a plausible claim that the DMC Defendants
were a joint employer, and thus this claim must be dismissed as to the DMC
Defendants. See e.g., Lee v. EUSA Pharma US LLC, 2023 WL 3212334, at *3 (E.D.
Mich. May 2, 2023) (Accepting every factual allegation as true and making all
reasonable inferences in favor of the plaintiff, the court could not conclude or
infer that the defendant was the plaintiff’s joint employer).
Additionally, all Defendants argue that the Michigan FCA, unlike the federal
FCA, only protects employees involved in “initiating, assisting in, or participating
in the furtherance of an action,” or “an investigation” of an action, under the act.
See Mikhaeil v. Walgreens Inc., 2015 WL 778179, at *11 (E.D. Mich. Feb. 24, 2015)
(The Michigan FCA is more limited than the federal FCA and only protects an
employee “who engaged in lawful acts, including initiating, assisting in, or
participating in the furtherance of an action under this act or because the
employee cooperates with or assists in an investigation under this act” and does
not protect against “other efforts” like the federal FCA) (quoting Mich. Comp.
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Laws § 400.610c). According to Defendants, nothing in the TAC suggests that
Plaintiffs initiated, assisted in, or participated in the furtherance of an action
under the Michigan FCA or cooperated with or assisted in an investigation under
the Michigan FCA. In response, Plaintiffs argue “that is simply not true based on
the allegations asserted in [the TAC] and Exhibit A.” (ECF No. 59, PageID.2033).
The TAC and Exhibit A belie Plaintiffs’ arguments. Exhibit A is
documentation of Plaintiffs’ complaints about health and safety along with
documents relating to a MIOSHA investigation, but nothing in these documents
evidence any Michigan FCA investigation or that Plaintiffs assisted in any such
investigation. The same is true of the allegations in the TAC. Nothing in the TAC
even refers to the existence of a Michigan FCA investigation related to Plaintiffs’
complaints or that they assisted or participated in any such investigation. (ECF
No. 50). Accordingly, the TAC fails to plausibly allege a violation of the Michigan
FCA retaliation provision and this claim against all Defendants must be dismissed
for this reason as well.
C.
Count II – the Federal FCA
To succeed on a claim against Defendants for violating the retaliation
provisions of the federal FCA (31 U.S.C. § 3730(h)), Plaintiffs must show that (1)
they engaged in a protected activity, (2) the DMC Defendants knew they engaged
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in the protected activity, and (3) the DMC Defendants discharged or otherwise
discriminated against the employees because of the protected activity. Fakorede
v. Mid-S. Heart Ctr., P.C., 709 F. App’x 787, 789 (6th Cir. 2017) (citing Yuhasz v.
Brush Wellman, Inc., 341 F.3d 559, 566 (6th Cir. 2003) and Jones- McNamara v.
Holzer Health Sys., 630 F. App’x 394, 398 (6th Cir. 2015)). Dismissal of a
retaliation claim is proper when a plaintiff fails to adequately plead any one of
these three elements. Id.
While the DMC Defendants argue that the TAC fails to plausibly allege all
three elements, the court need only address the first: protected activity. As
explained in Fakorede, relevant protected activity would be an “effort[ ] to stop 1
or more violations of [the FCA].” Id. (quoting 31 U.S.C. § 3730(h)). Such an effort
must stem from a reasonable belief that fraud is being committed against the
federal government. Id. (citing Jones-McNamara, 630 F. App’x at 400). Thus, to
sufficiently plead protected activity, a plaintiff “must allege conduct directed at
stopping what he reasonably believed to be fraud committed against the federal
government.” Id. (citing Miller v. Abbott Labs., 648 F. App’x 555, 560 (6th Cir.
2016)). Plaintiffs argue, in conclusory fashion, that their complaints to OSHA,
hospital management, and their employers were all “efforts to stop violations of
the FCA.” (ECF No. 59, PageID.2036).
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The facts in Fakorede illustrate when allegations insufficiently identify any
misconduct that violates the federal FCA or fail to allege that the complaints at
issue were aimed at stopping a violation. In Fakorede, the background facts are
as follows:
Fakorede was a physician who worked as a cardiologist
in Jackson, Tennessee from 2013 to 2015. He was
recruited to work in the Jackson area by the JacksonMadison County General Hospital District—a Tennessee
governmental entity—in order to fill a need for
cardiologists in the area.
As a result, Fakorede became an employee of MidSouth, a private corporation in Jackson. Under a
separate recruiting agreement, the Hospital District
agreed to establish a support account that ensured
Fakorede was paid $500,000, no matter his total patient
collections. Essentially, the Hospital District permitted
Fakorede to use the support account to draw the
difference between his net collections (total collections
value minus any expenses attributed to him) and
$500,000. Instead, in accordance with its separate
employment agreement, Mid-South simply paid
Fakorede $500,000, accounted for his collections, and
then directed him to draw on the support account based
on those calculations. Fakorede then assigned the draw
to Mid-South. Additionally, Mid-South and Fakorede
agreed that, if Fakorede did not stay for the full threeyear term outlined in the recruiting agreement, he
would owe any draw amount back to the Hospital
District. However, Mid-South agreed to indemnify
Fakorede if the Hospital District determined “based on
an accounting” that draws from the support fund had
been improperly calculated.
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Approximately ten months into his first year, Fakorede
asked for documentation related to Mid-South's
calculations of the draw totals. Then, approximately
fourteen months after starting work at Mid-South—
some four months after he first raised concerns about
how expenses had been calculated—Fakorede was
terminated. It later came to light that Mid-South had
improperly attributed over $200,000 in expenses to
Fakorede during his first year. He now brings this
retaliation claim under the FCA, 31 U.S.C. § 3730(h),
based on his termination.
Id. at 788. In order to tie his conduct to federal fraud and survive a motion to
dismiss, Fakorede asserted that, if Mid-South improperly calculated expenses to
overdraw from the support account, then any Medicare claims “tainted” by
violations of the Stark Law and Anti-Kickback Statute were submitted to Medicare
in violation of the FCA. Id. at 789-90. Essentially, as explained by the Sixth Circuit,
Fakorede “requested information related to expenses attributed to him by his
private employer, expressed concerns as to whether those expenses were
correctly calculated and reimbursed by a Tennessee entity, and reminded others
that an audit should check for compliance with federal law.” Id. at 790. The court
concluded that this insufficiently alleged conduct reasonably related to fraud
against the federal government. Id.
Similarly here, the allegations the in the TAC fail to show Plaintiffs’
complaints were reasonably related to fraud against the federal government. The
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TAC contains conclusory allegations that “Defendants violated and falsified
Certificates of Participation in order to bill Medicare / Medicaid,” (ECF No. 50,
¶ 63), that “the Government, unaware of the falsity of the records, statements
and claims made or caused to be made by Defendants,” paid the claims, (ECF No.
50, ¶ 162; see also ¶¶ 110-12, 167-68). The TAC also identifies one complaint
where a Plaintiff wrote that “[i]f you take patient’s money and bill medicare [sic]
and Medicaid for services then the ORs and hospital rooms must be sterile and
clean if they knew that the ORs and rooms were filled with disgusting conditions
they would never pay.” (ECF No. 50, ¶ 131). These allegations and the single
complaint mentioning Medicaid, however, do not specifically identify any alleged
misconduct that violates the federal FCA or show that Plaintiffs’ complaints were
aimed at stopping a federal FCA violation. Simply stating that Plaintiffs know that
the DMC receives Medicare/Medicaid payments does not equate to a federal FCA
violation or that Plaintiffs’ complaints were reporting one. See Ling v. Pharmacy
Alternatives, LLC, 2022 WL 36404, at *4 (D. Kan. Jan. 4, 2022) (Where the only
facts alleged regarding the plaintiff’s alleged protected activity are that she raised
concerns about the defendant having unlicensed and unregistered personnel
dispensing prescription medications in the state of Kansas in contravention of
Kansas law and that she contacted the Kansas Board of Pharmacy, the plaintiff
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was concerned about violations of Kansas law, not with trying to stop one or
more violations of the FCA; and thus failed to sufficient plead protected activity
under the FCA.). Like in Fakorede, nothing in the TAC shows that Plaintiffs
understood, were motivated by, or were even aware of the federal FCA or the
Defendants’ billing practices and whether Crothall/Compass’ services are even
billed to Medicare/Medicaid. Fakorede, 709 F. App’x at 790. Accordingly,
Plaintiffs have not plausibly alleged protected conduct under the federal FCA and
the motion to dismiss this claim must be granted.
IV.
CONCLUSION
For the reasons set forth, the motion to dismiss Counts I and II of the Third
Amended Complaint is GRANTED.
SO ORDERED.
Date: March 27, 2024
s/F. Kay Behm
F. Kay Behm
United States District Judge
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